The partnership of Add and Bal is adding a new partner, Cat, and its assets and equities at book value and fair value just prior to her admission to the partnership on January 1, 2016, are as follows:

On January 2, 2016, Add and Bal take Cat into the partnership of Add, Bal, and Cat for a 40 percent interest in capital and profits.
REQUIRED
1. Prepare journal entries for the admission of Cat into the partnership for an investment of $160,000 assuming that assets (including any goodwill) are revalued.
2. Prepare a balance sheet for the Add, Bal, and Cat partnership on January 2, 2016, just after the admission of Cat.

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alueFair Value Assets Cash Accounts receivable-net Inventories Plant assets-net $15,000 45,000 50,000 90,000 $200,000 $15,000 40,000 60,000 105,000 $220,000 Equities Accounts payable 15% note payable Add capital (60%) Bal capital (40%) $30,000 50,000 64,000 56,000 $200,000 $30,000 40,000